Zacks.com Featured Highlights: Copart, Beacon Roofing Supply, Broadcom, Moody's And Forrester Research
Zacks Investment Research | Dec 13, 2017 11:32PM ET
For Immediate Release
Chicago, IL – December 14, 2017 - Stocks in this week’s article Copart, Inc. (NASDAQ:CPRT) , Beacon Roofing Supply, Inc. (NASDAQ:BECN) , Broadcom Limited (NASDAQ:AVGO) , Moody's Corporation (NYSE:MCO) and Forrester Research, Inc. (NASDAQ:FORR) .
Pick 5 Winning Momentum Stocks Using the Driehaus Method
One of the most-favored approaches for investors with a high-risk appetite is the Driehaus strategy. Investors can pick momentum stocks using it to eke out satisfactory returns. The strategy was formulated by Richard Driehaus using the buy high and sell higher principle. Its success has helped Driehaus earn a place in Barron’s All-Century Team.
The American Association of Individual Investors (AAII) proved that the strategy has the potential to offer high returns. AAII’s portfolio, which was developed following the strategy, returned 13.5% and 18.1% in the five and 10-year time frames, respectively, compared with -1.1% and 4.2% returns registered by the S&P 500. Thus, investors with a high risk appetite might give the Driehaus strategy a thought to boost returns.
A Brief Note on Driehaus’ Strategy
Regarding the strategy, Driehaus once said: “I would much rather invest in a stock that’s increasing in price and take the risk that it may begin to decline than invest in a stock that’s already in a decline and try to guess when it will turn around.” In keeping with his insight, AAII took into account the percentage 50-day moving average as one of the key criteria before designing a portfolio.
It is calculated by dividing the numerator (month-end price minus 50-day moving average of month-end price) by the 50-day moving average of the month-end price. Another momentum indicator – positive relative strength – has also been included. A positive percentage 50-day moving average indicates that the stock is trading at a price higher than its 50-day moving average level, indicating an uptrend.
Moreover, AAII found that Driehaus primarily focused on strong earnings growth rates and impressive earnings projections to pick potential outperformers. Companies with a strong history of beating estimates are also given importance in this strategy, which was made to provide better returns over the long term.
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